On December 31 of last year, Wolfson Corporation had in inventory 400 units of its products, which cost $21 per unit to produce. During January, the company produced 800 units at a cost of $24 per unit. Assuming that Wolfson Corporation sold 700 units in January, what was the cost of goods sold (assume FIFO inventory accounting)?
15600
To calculate the cost of goods sold (COGS) using the FIFO (First-In, First-Out) inventory accounting method, we need to determine the cost of the units sold based on the order in which they were purchased.
First, let's determine the number of units available for sale in January. On December 31, there were 400 units in inventory, and during January, the company produced an additional 800 units. Therefore, the total number of units available for sale in January is 400 + 800 = 1200 units.
Next, we need to identify the cost of the units sold. Since the company sold 700 units in January, we will start by accounting for the units from the oldest inventory first (December 31).
Since there were 400 units in inventory on December 31, we will assume that these are the first units sold in January. The cost per unit for these units is $21, so the cost of goods sold for these units is 400 units * $21 = $8,400.
Next, we need to account for the remaining 700 units sold. Since these units were produced in January, the cost per unit is $24. Therefore, the cost of goods sold for these units is 700 units * $24 = $16,800.
Finally, we can calculate the total cost of goods sold by adding the cost of goods sold for the December 31 inventory ($8,400) and the cost of goods sold for the January inventory ($16,800).
The total cost of goods sold in January for Wolfson Corporation would be $8,400 + $16,800 = $25,200.